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Lots of "techies" have great ideas about what can be done with Web
technologies. Lots of business experts have great ideas about the ways in which
these technologies can be used to enhance customer/partner relationships,
increase market share, enhance competitive advantage, etc. However, many of
these e-business ideas never take shape simply because it was so difficult to
"sell" the idea to the key business decision-makers.

So what is the key to selling an e-business idea to the holders of the purse
strings? The key is to try to understand the decision that the purse-string
holder is trying to make from their perspective.

They need to know the following:

Whether or not there will be a tangible payback

How much it will cost to do it

How much it would cost the business NOT to do it

Why this idea should take priority over other ideas

Unfortunately, some of these questions are not so simple to answer for
e-business systems.

Payback

There are some e-business systems that have very tangible benefits. For
example, it is often easy to prove that an e-procurement system will save the
company money by enabling bulk ordering of goods so that the company can take
advantage of bulk ordering discounts. Similarly, it is easy to show that by
signing up to an e-marketplace, a company will save money by being able to take
advantage of the "perfect market" by buying goods at the cheapest
price on offer at the time.

In these cases, justifying the cost of building an e-business system is
simply a case of working out the estimated savings over time and indicating when
those savings made add up to the same amount as the system cost (that is, when
the system has paid for itself).

However, some e-business systems, by their very nature, can have paybacks
that appear on the surface to be "intangible." At first sight, it
would seem to be very difficult to measure the value to the company of typical
paybacks from e-business systems such as the following:

Increased customer satisfaction

Increased customer retention

Increased synergy between departments or between partner
companies

Improved availability of accurate, up-to-date information

Competitive advantage

However, there are ways of putting monetary values behind some of these
"intangibles."

Marketing departments in many companies, for example, do have historical data
indicating how increases/decreases in customer satisfaction have affected the
amount of profit made in the past. Estimating the extent to which customer
satisfaction might rise as a result of an e-business system, however, can be
problematic. It may be that other companies (maybe even your competitors) have
used similar e-business systems, and have achieved rises in customer
satisfaction levels; if so, these figures are useful ammunition in your fight to
obtain budget approval. If not, take a conservative estimate of how much
customer satisfaction will rise, and use this to point out that these figures
represent the minimum payback you anticipate your system will provide.

Again, many companies have readily available figures representing the
estimated cost of each customer lost. Although it may be difficult to anticipate
how many more customers will be retained if an e-business system is successful,
it is worth emphasising that for each customer lost, your competition gains a
customer, and that represents a great opportunity loss from that point
onwards.

Questionnaires and surveys, either paper-based or posted on your Web site (or
hosted by questionnaire-generation Web sitessee
http://www.e-survey.com) can be
used to provide estimates of the amount of customer demand there is for the new
features, services, or facilities to be provided by the new system.

Many e-business systems however, do not have customer focus, and instead are
focussed on internal processes. With these systems, because there is no direct
relationship between the system and customer behavior, it is important to look
for indirect savings on what is spent internally in order to provide customer
services/products.

For example, if it is anticipated that the system will reduce the amount of
paper used to carry out business processes by 80%, the cost of buying paper
currently should be ascertained so that a specific figure can be given as to how
much money will be saved by the system.

If, by providing one system that all business partners have access to, the
e-business system is expected to reduce the number of errors made within a
business process, the cost of building this system can be justified by working
out the average cost of each error currently and multiplying that by the number
of errors currently detected. Even the costs of retyping data from paper into a
computer system, the costs of maintaining two sets of data, wasted phone calls
and visitsall can be measured to support the case for the introduction of
the new e-business system.

Some e-business systems enable business partners to collaborate on projects
so that better planning, estimating, and forecasting is possible. In such cases,
it is important to ascertain how much money is lost whenever a forecast is
inaccurate due to lost sales or the cost of storing stock, and to estimate how
much more accurate forecasts will be when both parties can contribute towards
the forecasts, and/or more historical data is made available to aid forecasting.
Sainsbury's, a major retailer in the UK, saved a great deal of money
through more accurate forecasting enabled in this way using its collaborative
planning e-business system.

Providing a Web site via which business partners can communicate and/or share
data and documents may provide some monetary benefits that are not easy to
provesuch as the reduced need for phone calls, faxes, and physical
meetings (the cost of the latter can be enormous).

Another benefit that is difficult to translate into monetary terms is the
capability to make more accurate judgments and decisions because e-business
systems are constantly being updated with the latest information, and therefore
the data is more accurate and up-to-date.